CRA rules against civil service union push to make Phoenix damages non-taxable
Canada's biggest civil service union says it is considering taking legal action after the Canada Revenue Agency ruled that damages paid to federal employees in connection with the troubled Phoenix pay system are taxable.
The Public Service Alliance of Canada says it has received notice from CRA that the agency won't review the taxability of the payments.
The payments were part of a contract settlement dealing with the financial, mental and emotional harm caused to government employees who were overpaid, underpaid or not paid at all through the Phoenix system.
Payments of up to $2,500 each were issued in March to civil servants affected by the damages agreement, minus applicable income taxes and other deductions.
In a letter sent to the union, dated April 27, the tax agency turned down the union's request to review the taxation issue.
In part, CRA said the government agency responsible for paying civil servants didn't cooperate with its review.